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I was speaking across the U.S. conducting Continuing Legal Education (CLE) seminars about estate planning. One of the cities I presented to was Gulfport, Mississippi. I often tell estate planning attorneys about the Glenn Neasham case, as it is an "outlier" or among the most appalling cases in America.

When I told the attorneys in Mississippi about the California case of a criminal conviction for selling an annuity, they were not surprised. The attorneys in Mississippi said the people in California are nuts anyway. Amazing! The people in Mississippi look down on the people in California? However in this case, they may be right.

In any event, one attorney suggested a solution which he has used for all his clients over age 70. He has them obtain a statement of good health from their physician. Why? He said he does it for estate planning purposes, so the beneficiaries will not challenge the will or estate plan. And best of all, Medicare pays for it! So simple and such a good idea.

Debate then followed about whether this statement should be obtained for clients as young as 65 years of age, as Medicare would pay for it. In any event, it seems like a good solution.

The issue of dementia came up in reference to a recent study which found that 50 percent of Americans will suffer from dementia by age 80, and some even younger.

The other reason the statement of good health is obtained is its use in tax court. In a recent case, Kite v. Commissioner (Tax Court 2013), the statement was necessary in obtaining a "private annuity" and accepted by the court. It might seem odd that agents obtain a statement of good health, even in small annuity purchases, but that appears to be the way things are headed — at least in California.

What I really dislike about the California ruling is the vague law with no guidance. I understand the old Soviet Union would have such laws to incarcerate people they did not like, but this is the U.S.A. I understand the Nazi regime would enforce such laws, but this is the U.S.A.

California dreaming

So, who is really guilty in my opinion concerning this case? The prosecutors in California. There were other means to settle the case or prevent elder abuse, as they call it. However, when the state becomes the abuser, they should pay. In this case, the state should pay for its overreaching and lack of guidance. Too bad this isn't on "60 Minutes."

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About the Author

Adjunct Professor, Graduate Tax Program, Northeastern University
MBA University of South Florida 1979
J.D. University of Miami 1983
LL.M Tax University of Denver 1984
Licensed before U.S. Tax Court, 11th Circuit Court of Appeals, 9th Circuit Court of Appeals and U.S. Supreme Court.
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